DEG, LLC v. Township of Fairfield

DEG, LLC, PLAINTIFF-RESPONDENT,v.TOWNSHIP OF FAIRFIELD AND ZONING OFFICER, GLENN PLUMSTEAD, IN HIS OFFICIAL CAPACITY, DEFENDANTS-APPELLANTS.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-6984-05.

The opinion of the court was delivered by: Skillman, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued October 2, 2007

Before Judges Skillman, Winkelstein and Yannotti.

The threshold question presented by this appeal is whether a governmental body has authority to enter into a settlement of a case challenging the constitutionality of a statute under which the governmental body agrees to an injunction against enforcement of the statute. We conclude that a governmental body has such authority if it reasonably concludes there is a substantial question concerning the statute's constitutionality and the costs of the statute's defense are not justifiable. However, the governmental body may seek to vacate or modify the judgment memorializing such a settlement if it can show that enforcement of the judgment would no longer be equitable due to changes in the law or facts since its entry.

I.

N.J.S.A. 2C:34-7 prohibits any person from operating a sexually-oriented business within 1,000 feet of any place of public worship, school, school bus stop, child care center, public playground, place of public recreation, hospital or residential zone, unless such a business is expressly permitted by municipal ordinance. Any violation of this prohibition constitutes a fourth-degree crime. N.J.S.A. 2C:34-7d.

In Township of Saddle Brook v. A.B. Family Center, Inc., 156 N.J. 587, 596-98 (1999), the Court held that N.J.S.A. 2C:34-7 may be constitutionally applied only if there are "adequate alternative channels of communication" of sexually-oriented materials "within the relevant market area." The market area is not limited to a single municipality but extends to "areas located in other municipalities 'within reasonable proximity[.]'" Id. at 597 (citations omitted).

In July 2005, DEG entered into a five-year lease of a 5,000 square-foot building on Route 46 in Fairfield with the intention of using it as an adult video and lingerie store. This building is located in an area where sexually-oriented businesses are prohibited by N.J.S.A. 2C:34-7.

When DEG entered into the lease, a Fairfield zoning ordinance prohibited sexually-oriented businesses anywhere in the municipality. DEG applied for a permit for its proposed adult store, which the zoning officer denied based on the ordinance.

DEG then filed this suit claiming that Fairfield's zoning ordinance violated the First Amendment. DEG also claimed that N.J.S.A. 2C:34-7 was unconstitutional as applied to its proposed adult store. In support of this claim, DEG submitted an expert report which concluded that there is no location within the Fairfield market area where a sexually-oriented business can operate without violating N.J.S.A. 2C:34-7 or local zoning laws.

DEG applied to the trial court for a declaration of the unconstitutionality of N.J.S.A. 2C:34-7 as applied to its proposed sexually-oriented business. DEG also applied for a declaration of unconstitutionality of the ordinance prohibiting sexually-oriented businesses anywhere in the municipality. DEG sought entry of an order requiring the zoning officer to issue a permit allowing it to undertake the renovations required to commence operations.

On November 4, 2005, the trial court issued a letter opinion which concluded that the zoning ordinance prohibiting sexually-oriented businesses anywhere in Fairfield was "unconstitutional on its face." The court also concluded based on the limited record presented on the application for temporary restraints that "DEG has established that there are no locations in [Fairfield] or the surrounding municipalities where DEG can open its adult business without violating N.J.S.A. 2C:34-7[,]" and therefore, DEG had "established a reasonable likelihood of proving that N.J.S.A. 2C:34-7, if applied to this location, would violate the First Amendment." In addition, the court concluded that "at this juncture, the public interest in the uninhibited exercise of free speech outweighs any interest the State or [Fairfield] may have in preventing DEG from opening its adult business." Accordingly, the court entered an order mandating issuance of the permits required for DEG to commence operations. The court also ordered a plenary hearing regarding the constitutionality of N.J.S.A. 2C:34-7 as applied to DEG's adult business.

Acting under authority of this order, DEG began operation of the "Essex Adult Emporium" on its premises.

Before the court could conduct a plenary hearing regarding the constitutionality of N.J.S.A. 2C:34-7 as applied to DEG's business, the parties entered into settlement discussions, which culminated in entry of the consent judgment upon which this appeal turns. This consent judgment provides in pertinent part:

2. In the event that the Township adopts a future ordinance permitting the sale of adult-oriented products in a zone other than the zone within which DEG is permitted to operate the Store, pursuant to N.J.S.A. 40:55D-68, DEG shall apply for, and the Township Zoning Official shall issue to DEG within ten (10) days, Certification of Non-Conformity for the Store. In all respects, DEG shall apply for said Certificate in conformance with said statute, with this ...

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